Warning Signs Ahead: Estate Planning for Financially Struggling Parents

Elderly parents with more debt and fewer savings are more susceptible to fraud

two people untying a rope knot

The Balance / Madelyn Goodnight

When Andrew Chan’s client approached his mother about setting up an estate plan, she was resistant. She had a will and an advanced health care directive—what more did she need?

But after a bit of coaxing about the importance of getting her bank accounts, insurance, and other assets together to plan for retirement or in the event of an unforeseen accident, she finally relented. It was then that her son discovered she had run up more than $80,000 in credit card debt and was being chased by multiple debt collectors.

“That was a bit of a shock for him,” said Chan, a partner at Locker Financial Services, who kept his client’s name confidential out of privacy concerns.

Talking to aging parents about money is difficult enough for adult children; according to one survey from 2018, nearly 75% of adult children hadn’t done so. It may be even more challenging for children to begin a conversation when their parents are struggling with financial issues such as massive debt, costly health care issues, or a gambling or shopping addiction.

A Look at the Data

Chan’s client is not alone: People age 65 or older are carrying more debt than ever before. A 2018 survey by the National Council on Aging showed 60% of households headed by someone age 65 or older hold some amount of debt, with a median amount of $31,300. In 1992, 41.5% of seniors held debt.

Other studies further dim the picture of older Americans’ financial health. About half of Americans either don’t have access to or participate in an employer-sponsored retirement plan, while 40% of Americans over the age of 60 rely solely on Social Security for their income.


At the same time, the COVID-19 pandemic forced millions of older Americans into early retirement. According to a Pew Research Center study, more than half of people over the age of 55 are now out of the workforce due to retirement, with around three million forced out because of the pandemic.

These figures, considered alongside rising medical and housing costs, highlight why having the estate planning talk with aging parents can be so difficult.

“A lot of parents are embarrassed or ashamed and don’t want their kids to know where they are financially,” said Vicki Cook, co-founder of the financial information website Women Who Money and co-author of “Estate Planning 101.”

Keep Calm and Carry On

Regardless of the state of your parents’ finances, they’ll still need a plan for their assets. According to a 2021 Gallup News poll, only 46% of adults in the U.S. have wills, and an even smaller percentage have assigned someone power of attorney to make legal and health care decisions for them in the event they become mentally or physically incapacitated.

In other words, more than half of all adults in the U.S. don’t have a legal record of how they want their financial and medical wishes carried out for them.

Against that backdrop, it’s important for adult children to remember that just getting parents to talk about their financial situation is a victory, said Charles Helme, managing director at BH Asset Management. Helme said the worst thing an adult child can do is be judgmental or come down on their parents because of their debt or lack of savings. “They will just shut down,” he said.


If your parents are reluctant to speak with you openly about their finances, consider involving a financial professional. Instead of being critical, Helme suggests praising them for being willing to seek the advice of someone who can help them work through the issues.

For instance, it isn’t just the amount of debt that matters, but also how it was accumulated, what kind of debt it is (mortgage, credit card, loans), and how it is being paid off. Or, as Helme said, “You don’t know what options you have until you know what’s happening.”

Not being critical is easier said than done, of course, especially when it comes to money. A majority of adults over age 40 are part of the “sandwich generation,” having both a parent over the age of 65 and financially supporting a child younger than 18. One-third of adults are providing parents 65 or older with financial assistance.

“It’s easy to get stressed out thinking about whether your parents can afford to retire or how to pay for their health care,” said Cook.

That’s why experts say that the earlier families can start talking about estate planning, the better. Given the financial impact of the pandemic and the subsequent high inflation rate, 2022 is an ideal time for families to start a conversation, said Cameron Huddleston, a personal finance writer and author of the book “Mom and Dad, We Need To Talk: How To Have Essential Conversations With Your Parents About Their Finances.”

She suggested using the current state of the economy or the spiraling stock market as an entry point to ask aging parents questions about what kind of planning they have done for retirement and what role, if any, they want you to play.

Another way to start the conversation is to relate it to your own experience or that of a friend who is going through a similar situation. “You can say that you are putting a will together and ask for advice on how they went about doing theirs,” Huddleston said.

For parents who are reluctant to talk to their kids or an estate planning professional—or are steadfast in preserving their independence—there are services that can help. Whealthcare Planning, for example, uses interactive tools that incorporate health care and financial planning to help older people evaluate risk and make better financial decisions.

It’s important to remember, however, that estate planning isn’t a one-time conversation. “It’s a process, not an event,” said Huddleston.

Scammers and Red Flags

Speaking with your parents about estate planning can also help you catch financial problems before they get out of hand. Every year, older Americans lose about $3 billion to financial fraud or abuse such as identity theft, lottery scams, IRS impersonators, and even elder abuse by family members. Stealing from seniors is so big of an issue that financial, legal, and government agencies have made rooting it out a priority. In May 2022, federal lawmakers passed the Empowering States To Protect Seniors From Bad Actors Act for that purpose.

There are, however, ways to help aging parents from falling victim to fraud. One of the most basic, for instance, is making sure they have a durable power of attorney designated to make financial and legal decisions for them in the event they are mentally or physically incapacitated. Another way is to educate them. There are dozens of books, online courses, and advocacy groups dedicated to helping seniors avoid financial fraud.

Older Americans who are the victims of financial fraud or otherwise struggling financially usually leave clues, said Andrew Chan. He points to research showing that people with Alzheimer’s disease or dementia start making financial mistakes such as missing or making late payments as much as seven years before they are officially diagnosed. Writing a lot of checks, buying gift cards for no reason, suddenly living beyond their means, or opening credit cards are among the red flags.

“If you start to see your parents doing things with money that are out of the ordinary, look deeper,” said Chan. The topic of financial fraud can be a great way to begin the estate planning conversation.

The Bottom Line

Talking about money with family is challenging. Many adult children are surprised by the state of their parents’ finances, and parents can be reluctant to open up about money, either out of embarrassment or in fear they’ll lose their independence.

Remember to come to each conversation about estate planning from a place of non-judgment, care, and helpfulness. This can protect your family from deepening financial woes, help you gain clarity on options for tackling debt, and better prepare everyone for the decisions that need to be made in the future.

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